Press Releases
<< BackApril 15, 1999 at 12:00 AM EDT
A.O. Smith Announces First Quarter Earnings of $.48 Per Share, a 17 Percent Increase Over First Quarter of 1998
A.O. Smith Announces First Quarter Earnings of $.48 Per Share, a 17 Percent Increase Over First Quarter of 1998
Earnings per share increased 17 percent over first quarter 1998 earnings of $.41 per share. Net earnings for the Milwaukee-based manufacturer rose to $11.4 million on a 15 percent increase in sales to $257 million.
"The robust domestic economy continues to have a favorable influence on sales of electric motors and water heaters," Robert J. O'Toole, chairman and chief executive officer, said. "Their growth more than offset the lower sales and profits of our Storage & Fluid Handling Technologies platform, the result of sluggishness in the capital goods industry and ongoing weakness in overseas markets."
First quarter sales of Electric Motor Technologies were $148 million, more than $36 million higher than the same period in 1998. First quarter performance reflected:
- Improved sales of hermetic motors, the result of the ongoing strength of the domestic air conditioning industry;
- First quarter sales and profits of the Scottsville, Ky., operation acquired in July of 1998; and
- Higher sales of fractional horsepower fan motors largely derived from the company's Tier One supply agreement with York International.
Operating profits improved significantly compared with the first quarter of 1998, due to the higher volumes and enhanced efficiency throughout the operation.
Increased sales of commercial water heaters and improved residential water heater performance enabled Water Systems Technologies to report a 10 percent first quarter sales increase to $82 million. Water Systems' commercial business continues to benefit from the domestic economy and its impact on commercial construction. A stronger market for standard commercial heaters and sales of new products, most notably the high-efficiency Master-Fit® line of commercial gas water heaters and the Cyclone XHE® commercial water heater, contributed to improved first quarter results.
Operating profits increased significantly over the comparable 1998 period, due to the higher commercial volumes and the impact of cost reduction activities throughout the operation.
Continued weakness in the capital goods sector, principally the petroleum production, chemical, and agricultural markets, resulted in significantly lower first quarter sales and profits for the Storage & Fluid Handling Technologies platform.
"Overall, we are quite pleased with our first quarter performance and are off to a good start towards executing our plan for 1999," O'Toole noted.
Forward-Looking Statements
This press release contains forward-looking statements. Although the company believes that its expectations are based upon reasonable assumptions within the bounds of its knowledge of its business, there can be no assurance that its financial goals will be realized. Although a significant portion of the company's sales are derived from the replacement of previously installed product, and such sales are therefore less volatile, numerous factors may affect actual results and cause results to differ materially from those expressed in forward-looking statements made by or on behalf of the company. Among such numerous factors, the company includes: the continued growth of the world-wide air conditioning, heating, and refrigeration market; the weather and its impact on the heating and air conditioning market; the pricing environment for residential water heaters; capital spending trends in the oil, petrochemical, and chemical markets; and the successful development of the company's business venture in China.
A.O. Smith Corporation is a diversified manufacturer with headquarters in Milwaukee, Wis. Its major product lines include: fractional horsepower, hermetic, and subfractional horsepower electric motors; commercial and residential water heaters; municipal, industrial, and agricultural storage tanks; and fiberglass piping systems.
A.O. SMITH CORPORATION AND SUBSIDIARIES (condensed consolidated financial statements - $000 omitted except per share data)
Statement of Earnings
Three Months ended March 31 Sales 1999 1998 Electric Motor Technologies $147,875 $111,839 Water Systems Technologies 81,988 74,554 Storage & Fluid Handling Technologies 27,473 36,562 Net Sales 257,336 222,955
Costs and Expenses Cost of Products Sold 207,003 177,186 Selling, General and Administrative 28,510 27,900 Interest Expense 2,331 1,624 Interest Income (340) (1,712) Other Expense 1,955 722 Tax Provision 6,475 6,038 Total Costs and Expenses 245,934 211,758
Earnings Before Equity in Loss of Joint Ventures 11,402 11,197 Equity in Loss of Joint Ventures 0 (1,019) Net Earnings $11,402 $10,178
Net Earnings Per Share of Common Stock (Diluted) $.48 $.41
Average Common Shares Outstanding (000's omitted) 23,742 24,714
A.O. SMITH CORPORATION Balance Sheet
March 31 December 31 1999 1998 ASSETS:
Cash and cash equivalents $17,552 $37,666 Receivables 171,441 133,764 Inventories 100,830 99,984 Deferred income taxes 10,882 11,376 Other current assets 5,058 4,599
Total Current Assets 305,763 287,389
Net property, plant and equipment 253,106 248,770 Goodwill 146,602 146,901 Other assets 89,709 84,372
Total Assets $795,180 $767,432
LIABILITIES AND STOCKHOLDERS' EQUITY:
Trade payables $77,244 $57,429 Accrued payroll and benefits 24,357 31,385 Product warranty 7,491 7,892 Income taxes 9,758 6,786 Long-term debt due within one year 4,629 4,629 Other current liabilities 27,090 24,036
Total Current Liabilities 150,569 132,157
Long-term debt 131,535 131,203 Other liabilities 62,013 60,636 Deferred income taxes 44,501 42,343 Stockholders' equity 406,562 401,093
Total Liabilities and Stockholders' Equity $795,180 $767,432
A.O. SMITH CORPORATION STATEMENT OF CASH FLOWS
Three Months ended March 31 1999 1998 Operating Activities Continuing Net earnings $11,402 $10,178
Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation & amortization 9,003 6,919 Equity in loss of joint ventures -- 1,019 Net change in current assets and liabilities (17,383) (14,711) Net change in noncurrent assets and liabilities (5,254) (6,223) Other (139) 266 Cash Used by Operating Activities (2,371) (2,552)
Investing Activities Capital expenditures (10,395) (6,942) Capitalized purchased software costs (408) (308) Investment in joint ventures 0 (2,652) Acquisition of business (531) 0 Cash Used by Investing Activities (11,334) (9,902)
Cash Used by Continuing Operations before Financing Activities (13,705) (12,454)
Discontinued Cash Used by Discontinued Operations before Financing Activities (1,301) (814)
Financing Activities Long-term debt incurred 332 641 Long-term debt retired 0 0 Purchase of common stock held in treasury (2,691) (20,231) Proceeds from common stock options exercised 42 0 Tax benefit from exercise of stock options 4 0 Dividends paid (2,795) (2,751) Cash Used by Financing Activities (5,108) (22,341)
Net decrease in cash and cash equivalents (20,114) (35,609) Cash and cash equivalents - beginning of period 37,666 145,896
Cash and Cash Equivalents - End of Period $17,552 $110,287